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  1. #41
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    Originally posted by ercchry


    in what world is $1400/month getting you into anything close to $400k? and no, im not talking mortgage payment alone
    I'm just saying a $400,000 place probably costs around $2000/month all in to own. Of that, $1400 goes to taxes, fees, interest, etc, ie. financially speaking you're throwing away just as much money by owning a $400K place as you are by renting for $1400. If you're only planning on staying in that place for 5ish years this makes sense, obviously as the time frame extends the principle portion grows.

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    ^

    And don't forget the ridiculous fees and transaction costs of buying and selling a home.

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    Except a $400,000 home is renting for 2 grand also...

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    Originally posted by woodywoodford


    I'm just saying a $400,000 place probably costs around $2000/month all in to own. Of that, $1400 goes to taxes, fees, interest, etc, ie. financially speaking you're throwing away just as much money by owning a $400K place as you are by renting for $1400. If you're only planning on staying in that place for 5ish years this makes sense, obviously as the time frame extends the principle portion grows.
    this is what it must feel like to be a parent and talking about raising kids with someone who is not a parent

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    So do most people on here expect a landlord to rent out a place for less than its costs him to own it just because he is also building equity?

    ( ie mortgage + taxes + anything else included)

    Seems a touch delusional no? I think most landlords price their rentals to net profit not including the mortage equity imo.
    Originally posted by Thales of Miletus

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    Originally posted by killramos
    So do most people on here expect a landlord to rent out a place for less than its costs him to own it just because he is also building equity?

    ( ie mortgage + taxes + anything else included)

    Seems a touch delusional no? I think most landlords price their rentals to net profit not including the mortage equity imo.
    Landlords should net profit but not all do. There's enough inventory for high end condos that some desperate landlords or ones who don't care about cash flow will rent out without a net profit. There is very little margin to be had in the high end rental game given housing price.

    Example:

    For a 2 bedroom condo

    2,000 mortgage
    200 property tax
    450 condo fee & insurance
    = 2,650/month expenses

    There's not many 2 bedroom rentals going for more than that.

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    The rental market in Calgary is still pretty hot (last I checked). No one is renting for less than their cost. No one.

    If you're renting, you are losing money compared to owning, barring owning some complete dump that requires lots of maintenance.

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    Originally posted by woodywoodford


    Case in point, this one came up yesterday. $1700/month and it's not even a high rise. Sure it's 800 sqft and somebody will probably take it, but I wouldn't pay more than $1400 for that. And then I'm not willing to pay more than $1400 rent for anything. Any more than that is poor financial decisions IMO since thats roughly the "disposed" money on buying a $4-500,000 place, which would get you a tier up from starter homes.
    saw units in that building. 1 bedroom would run between 225-250k to purchase. Not worth anywhere near what they're asking to rent. It's an old building, zero sound insulation, can hear neighbor's dogs barking and the conversion done on that was fast and sloppy. Personally I wouldn't value any unit in that building over 200k but unlike many, I have not yet left the realm of reality and entered lala land when it comes to condo prices in this city.

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    Originally posted by dj_patm
    The rental market in Calgary is still pretty hot (last I checked). No one is renting for less than their cost. No one.
    Disagree on both. Rental market (especially newer condos) has a high level of inventory. Plenty of landlords rent at or below cost (look at numbers).

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    The rental market will get tighter (and is already tight) due to the economy tanking. People will rent instead of buying (IMO, but I don't really know anything so take that for what it is worth).

    Originally posted by A790

    CMHC fees, which are going up, are an unnecessary expense that can be avoided with a 20% down payment.

    Assuming you put 5% down on that $150k condo, you're adding $4,488 to the loan value. $5k isn't a big deal, but most condo's aren't $150k. The average condo, at $305k, works out to $9,127. That's a chunk of change.


    ***

    Making mortgage payments is much different than rental payments. With rent, you can just walk away. Cya later. No harm, no foul. You don't need to worry about property taxes, building/unit repairs, special assessments, etc. You pay your rent, you live somewhere.

    But tell me, how is someone who couldn't even come up with a 5% down payment (and thus had to finance it or leverage themselves to make it happen) going to handle a $10k+ special assessment from their condo board? Or their toilet leaking overnight, flooding their main floor and destroying the floor/ceiling/etc.?
    At the end of the day, it is a matter of perspective and risk tolerance. You argument basically amounts to "you should be able to 100% handle everything that could possibly happen", in which case, nobody would ever own a place.

    I'm approaching it from the viewpoint of overall, it is better for most people to own a place, build equity in it (forced savings essentially) rather than make others rich. Surprisingly enough, your scenarios while VALID are "relatively" rare. Again, the risk portion of the equation.

    And finally, no matter what, you still have to PAY rent. You don't get to just "walk away" as you still need a place to live. And there are plenty of nice, well appointed new condo units for $150k-$200k (since we are talking about FTHB). Saving up $30k is a lot of cash. I just don't agree with it. The rules in place are obviously doing SOMETHING right as foreclosures and forfeitures are pretty dang low.

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    Originally posted by HiTempguy1
    At the end of the day, it is a matter of perspective and risk tolerance. You argument basically amounts to "you should be able to 100% handle everything that could possibly happen", in which case, nobody would ever own a place.

    I'm approaching it from the viewpoint of overall, it is better for most people to own a place, build equity in it (forced savings essentially) rather than make others rich. Surprisingly enough, your scenarios while VALID are "relatively" rare. Again, the risk portion of the equation.

    And finally, no matter what, you still have to PAY rent. You don't get to just "walk away" as you still need a place to live. And there are plenty of nice, well appointed new condo units for $150k-$200k (since we are talking about FTHB). Saving up $30k is a lot of cash. I just don't agree with it. The rules in place are obviously doing SOMETHING right as foreclosures and forfeitures are pretty dang low.
    Very good points. This just demonstrates the difference of risk tolerance between you and I.

    I view someone who saved the 10%+ down payment as someone who is financially responsible and able to budget. Thus, they would be less likely to be put into a bad situation compared to someone who didn't.

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    Originally posted by dj_patm
    Except a $400,000 home is renting for 2 grand also...
    I'm just talking about the idea of buying to get a starter home with the goal of upgrading in around 5 years.

    I'm in the market for around $400,000 because I can afford to spend $2000 a month on housing. But I've been watching listings for about a year now and have hardly found any units in that price range that are worth getting excited about, ie. I'd just move in for 5 years then try and move up to a nicer place that is more what I'm looking for.

    So for me it makes a lot more sense to just keep on renting for up to $1400/month (so that I'm "throwing away" the same amount as if I'd bought), invest the $600 balance, and in 5 years have a lot more equity than if I'd done the "old fashioned" route and bought a cheap first home as a stepping stone to something nicer.

    In other words and in my opinion, being able to pay $2000/month for ownership does not mean you can afford to rent for $2000/month. Ownership gives $600 invested, $1400 disposed. That's where the $1400 rent budget comes from.

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    Originally posted by woodywoodford


    I'm just talking about the idea of buying to get a starter home with the goal of upgrading in around 5 years.

    I'm in the market for around $400,000 because I can afford to spend $2000 a month on housing. But I've been watching listings for about a year now and have hardly found any units in that price range that are worth getting excited about, ie. I'd just move in for 5 years then try and move up to a nicer place that is more what I'm looking for.

    So for me it makes a lot more sense to just keep on renting for up to $1400/month (so that I'm "throwing away" the same amount as if I'd bought), invest the $600 balance, and in 5 years have a lot more equity than if I'd done the "old fashioned" route and bought a cheap first home as a stepping stone to something nicer.

    In other words and in my opinion, being able to pay $2000/month for ownership does not mean you can afford to rent for $2000/month. Ownership gives $600 invested, $1400 disposed. That's where the $1400 rent budget comes from.
    This is a good strategy but you can't say you are getting the same quality/size/location of home renting for $1400 compared to buying for $400k. So while that extra $600/month will help you save for a larger down payment, you are sacrificing something in the meantime.

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    Originally posted by A790

    Very good points. This just demonstrates the difference of risk tolerance between you and I.

    I view someone who saved the 10%+ down payment as someone who is financially responsible and able to budget. Thus, they would be less likely to be put into a bad situation compared to someone who didn't.
    I wonder what percentage of all first buyers put 5% down vs. 10+%
    Ultracrepidarian

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    Originally posted by msommers


    I wonder what percentage of all first buyers put 5% down vs. 10+%
    Me too! Some quick Googlin' found:

    http://homeownership.ca/homeownershi...uyer-in-canada

    http://www.theglobeandmail.com/globe...ticle10931739/

    Data came from an online survey though, so take that for what it's worth.

    This looks like it may be a bit more accurate (second half of the article):

    http://www.thestar.com/business/pers...he_plunge.html

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    Originally posted by msommers


    I wonder what percentage of all first buyers put 5% down vs. 10+%
    Our first home back in 2004, we did 5% down and took advantage of the "financed" downpayment plan the builder offered. House took about a year to build, we saved up the 5% plus a nestegg in that year. We had both paid our own way through University and came out debt free, but with very little cash to our names.

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    so $400k, 20% down, 25yr amortization, 3% fixed...

    $80k DP
    $1514/month mortgage payment
    $200/month taxes
    $100/month insurance
    $300/month utilities
    $100/month cable/internet

    $720/month onto principle
    $1495/month sunk costs
    $400/month (on average, over life of home) maintenance costs
    $530/month lost op cost on down payment (8% annual return)

    based off 5 years of ownership before movin on up:
    2% inflation annually
    $41k in appreciation of asset
    $20k in realtor fees
    $4.5k in lawyer fees (in, then out)

    do what you wish with these numbers, see if in real life it makes sense

    EDIT: based off of 5 years ownership and a 8% return on money, buying a $400k house vs renting for $1400/month, renting wins... house: $143k after 5 years

    renting with 8% return, monthly contributions equal to total liabilities with home ownership: $209k
    Last edited by ercchry; 02-25-2015 at 02:37 PM.

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    Originally posted by A790


    This looks like it may be a bit more accurate (second half of the article):

    http://www.thestar.com/business/pers...he_plunge.html
    The big down payment also allows most buyers to avoid Canada Mortgage and Housing Corp. insurance. While that has been pretty consistent for several decades, what’s changing is how young people are coming up with the cash. They’re finding it harder to save enough to keep ahead of price increases, so they’re relying more on gifts and loans from parents and grandparents.
    Wow. I wish I could get a $30k interest free loan from my parents or grandparents

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    Originally posted by HiTempguy1
    Wow. I wish I could get a $30k interest free loan from my parents or grandparents
    lol same

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    Last edited by navdeep; 06-07-2016 at 06:36 AM.
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